There was a lot packed into the 740 page near $500-billion federal budget tabled last Monday. Somebody counted 230 new spending proposals, the largest of which is the $30-billion over five years for childcare. That’s an important, long-overdue commitment but it wasn’t the most noteworthy thing about the budget. The big story is what’s missing from the longest, most postponed and verbose budget in Canada’s history.
Notable in their absence were increased health transfers to the provinces and national pharmacare, while elder care was barely in evidence. To that big three of health care can be added proposals that have emerged since the pandemic further exposed the inequities in our country – things like a wealth tax, universal basic income and aggressive programs to create affordable housing. With the exception of childcare and improved benefits for low-income workers the budget reduces “build back better” to an empty slogan.
But let’s stick to health care, starting with elder care. Early in her first budget speech as Minister of Finance Chrystia Freeland noted the devastating impact of the pandemic on elders, especially those in long-term care facilities. “To them, and to their families, let me say this: I am so sorry. We owe you so much better than this.”
“So much better?” At this point, it amounts to a proposed $3 billion over five years “to help ensure that provinces and territories provide a high standard of care in their long-term care facilities.” That would average about $16 million a year for Nova Scotia, a mere drop in the $1-billion bucket this province already spends on its under-resourced long-term care sector.
But at least there is something in the budget for long-term care, which is more than can be said for pharmacare. A central plank in the Liberal 2019 election campaign, and promised as recently as last fall’s throne speech, the federal pharmacare plan has all but disappeared, ditched according to Toronto Star columnist Tom Walkom, by a pandemic-inspired desire by the feds to stay in Big Pharma’s good books. In any event the initiative is now reduced to a commitment “to engage with willing partners on national universal pharmacare, alongside other important health priorities.”
It would of course be easier to find willing provincial partners for improved elder care or a national drug plan if the feds were to agree to demands for increased health transfers to the provinces, constitutionally responsible for health care. The provinces have called for transfers to cover 35 per cent of health costs, up from the 22 per cent Ottawa was picking up before the pandemic. The Quebec government has been leading the provincial charge on unconditional transfers, fervently backed by their parliamentary allies, the Bloc Quebecois, holders of 32 seats much coveted by the other parties.
The Prime Minister has been saying, and repeated last week, that once the pandemic passes the Liberals will negotiate increases with the provinces. However, the future fiscal framework suggested in the budget runs contrary to that message.
As discussed here, the Conservatives, critics from the business think tanks and their mainstream media echo chamber have been calling for a “fiscal anchor” to replace the declining debt/GDP metric the Liberals used before the pandemic blew it up. Media coverage of the budget has given the opposite impression, but Freeland’s has delivered the anchor they were demanding.
Last month’s fiscal outlook from the Parliamentary Budget Office projected that without additional new spending, and excluding the government’s planned $100 billion in stimulus, the debt/GDP ratio would drop from 49.8% this fiscal year to 45.8% in 2025-26. The budget, including the $100 billion in stimulus, projects a drop from 51.2% this year to 49.2% four years from now. That leaves little room for additional spending on health transfers or anything else, something with which Freeland seemed entirely comfortable.
“… we have been clear in this budget, both in our commitment and also in our demonstrated actions that, following the extraordinary spending of this year, Canada’s debt-to-GDP ratio will decline, and we show in our fiscal tables a clear declining trajectory ending in 2025-26 at a 49.2% debt-to-GDP ratio. Further, as we point out in the budget document, we commit to unwinding the COVID-related deficits… In 2025-26, we come to a deficit of just 1.1%. I would say to honorable members and my colleague opposite that those are our anchors: a declining debt-to-GDP ratio and unwinding the COVID-related deficits.”
It’s going out on a limb, but it may be that in bowing to demands for a conservative fiscal anchor that’s just one half the G7 average debt/GDP, the Liberals have misfired politically. Conventional wisdom is that the document tabled last week is a pre-election budget and that the Liberals see a path to a majority in that election by taking votes from the NDP and Greens. The budget may not be much help in that endeavour.
Increase health transfers
Leger polled 1,504 Canadians following the budget. Consistent with party preference polling, 40% of respondents said Canada is on the right track, 36% said wrong track. But on a political landscape where the outcome may depend on swinging a handful of votes in a few dozen ridings the budget seems to have laid an egg. As Leger reported “a number of would-be NDP, Green and Bloc Quebecois voters said they are now less likely to vote Liberal.” The loss of potential NDP switchers was the highest: 23% said they were now less likely to vote Liberal, only 15% said more likely.
A second post-budget poll, this one from Ipsos for Global News with a sample size of 1,000, provided similar grist for the mill. It showed how the budget’s rightward tilt may be helping the NDP. The poll found Liberal support at 38% down two points from a week before the budget. The Conservatives were down two points at 27% and the NDP were at 19%, up six points from April 12.
If the budget did in fact bomb with potential third, fourth and fifth party switchers, the Liberals may soon be looking for a course correction. Maybe they should stop trying to poach voters from the left with vague promises. Instead go after Bloc voters, attacking the Bloc’s current raison d’etre with a firm commitment on increased unconditional health transfers to the provinces.
Raising the anchor, providing more money for health care for all provinces and cutting into voter support for the Bloc Quebecois – looks like a win-win-win.